ABSTRACT Small airway epithelial cell dysfunction and structural tissue remodeling are pathognomonic of chronic lung diseases, but molecular mechanisms are poorly understood. Much evidence indicates that initiation and/or progression of chronic lung disease is linked to progenitor cell dysfunction, hence suggesting that strategies aimed at modulating the regenerative capacity of epithelial progenitor cells could provide therapeutic benefits to patients. In preliminary studies we show that loss of alveolar type 2 (AT2) cells in lung tissue of patients with end-stage IPF is associated with distal airway basal and secretory cell hyperplasia. The source of distal airway basal cells and their contribution to repair vs remodeling in the setting of alveolar progenitor cell dysfunction is unclear. Influenza (PR8) virus infection in mice leads to recruitment of basal-like epithelial cells that expand to repopulate depleted epithelium. Our data suggest that the PR8-activated milieu of the infected lung leads to expansion of progenitor cell potency and acquisition of basal stem cell-like characteristics. We also found that the STAT3-dependent cytokine IL22 is induced early in the response to PR8 infection and was sufficient to initiate a program of basal cell differentiation in the absence of PR8 infection. Interestingly, we find that enhanced epithelial stemness by IL22/STAT3 signaling can be partially phenocopied by modulating p53 gene dosage. Based upon these data we propose to test the hypothesis that ectopic basal cell differentiation of distal airway progenitors enhances repair capacity in the face of severe injury and that these changes in cell fate are regulated by local production of IL22 leading to STAT3 mediated expansion of progenitor cell potency. Furthermore, we will test the related hypothesis that STAT3 effects of stem cell potency are mediated through suppression of p53. These hypotheses will be tested in aims that will take advantage of PR8 influenza virus infection in mice to understand roles for IL22/STAT3 innate immune signaling in regulation of progenitor cell fate and tissue repair or remodeling. Specific Aims will define roles for IL22/STAT3 signaling in regulation of airway progenitor cells (Aim 1), investigate mechanisms by which STAT3 regulates ?stemness? (Aim 2) and roles for nascent basal stem cells in repair and/or remodeling (Aim 3). Completion of these aims will provide new insights into cellular and molecular mechanisms of repair in acute lung injury and how persistent activation of these repair pathways might contribute to tissue remodeling in the setting of chronic lung disease. We anticipate identification of therapeutic targets that could lead to the development of novel therapies to alter outcome in patients with acute and chronic lung disease.